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Markets Slump as the Fed’s Meeting Minutes are Released, U.S. Jobless Claims Rise & Geopolitics Send Oil Prices Up

GBPUSD slips as FED minutes released

On Thursday, the cable rate fell, as markets reacted to the release of the latest Federal Reserve policy meeting minutes.

December’s minutes showed that the Fed were increasingly worried about the rapid rise in inflation and expected issues surrounding global supply bottlenecks to continue well into 2022.

A quote from the minutes stated that, “It may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated.”

💡 The Cable wasn’t the only one to be hit
Tech stocks and crypto also were in the red today, Bitcoin traded at 2% lower and Ethereum could be seen 5% below yesterday’s price.

Growth assets such as technology stocks tend to be hit when rates rise, as future earnings becomes less attractive to investors when yields are higher. That sentiment has filtered through to cryptocurrencies, which are seen as risker assets.

This comes as the Fed now looks set for multiple rate hikes in upcoming months, in order to combat rising consumer prices.

GBPUSD hit an intraday low of 1.3490, after hitting an earlier high of 1.3558.

U.S. Jobless claims rise, ahead of Non-farm payrolls

Data from the United States today reported that Initial Jobless Claims unexpectedly rose last week, ahead of Friday’s NFP announcement.

Figures from the Labor Department reported that initial claims for the week that ended January 1st came in at 207,000, up 7,000 from the week prior.


source: tradingeconomics.com

This came after markets had forecasted applications for state benefits to rise by 195,000 applications, which would have put claims at near historic lows.

Thursday’s data come ahead of the first Non-farm payrolls report, which is expected to show that 400,000 jobs were added to the U.S. economy last month.

As of writing, most U.S. indices were trading marginally higher.

Crude prices higher on Kazakhstan tensions

 For a third consecutive session crude oil prices traded higher, this time due to rising tensions in Kazakhstan.

Kazakhstan, which is a member of the OPEC+ cartel, has been experiencing civil unrest in recent days, in the aftermath of protests against rising energy prices.

💡How did the rising prices start?
 The Kazakh government announced it would lift price controls on liquified petroleum gas (LPG). Suddenly letting the market dictate LPG prices meant that most Kazakhs were paying nearly double for their gas during the new year period.
Watch Dr. Anas F. Alhajji’s analysis on the current situation

The protests turned deadly, with 13 police officers, and several dozen protesters reportedly killed during the tensions.

WTI prices rose to an intraday high of $80.28, once again reaching new 6-week high, for the third time this week.

Reports now suggest that Russia has sent in some troops, to help assist in calming the tensions, in order to help quell the violence.

“An investment in knowledge pays the best interest.”

– Benjamin Franklin

Eliman Dambell

Senior Market Analyst

 

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